- The Department of Trade and Industry has issued new rules on sea freight forwarding
- DTI Department Administrative Order 24-09 increases the paid-up capital/equity requirement for sea freight forwarders but maintains the minimum insurance coverage, among others
- Under the new rules, the Certificate of Accreditation is now valid for five years instead of two
The Department of Trade and Industry (DTI) has finally issued new rules on sea freight forwarding, which among others increase the paid-up capital/equity requirement for sea freight forwarders.
Under DTI DAO-24-09.pdf approved and signed on October 29 by acting Secretary Ma. Cristina Roque, the minimum paid-up capital will depend on any of these three forwarder categories:
- non-vessel operating common carrier (NVOCC), P5 million
- international freight forwarder (IFF), P3 million
- domestic freight forwarder (DFF), P1 million
The requirement compares with the previous P4 million mandated for an NVOCC, P2 million for an IFF, and P250,000 for a DFF.
The DAO, to be published on November 16, takes effect 15 days after publication in the Official Gazette. It amends the almost 20-year-old Administrative Order (AO) No. 06-2005 issued by the defunct Philippine Shippers’ Bureau.
The DAO applies to all sea freight forwarders, namely, NVOCC, cargo consolidator (CC), IFF, breakbulk cargo agent (BBA) or cargo consolidator agent (CCA), and DFF. All are required to first secure a DTI accreditation certificate before they can legally engage in their function and/or operations.
Companies applying for more than one category will have to comply with the paid-up capital/equity requirement for the higher/highest category applied for.
The new rules also place the validity of the Certificate of Accreditation (COA) at five years from two years.
An accredited firm may apply for additional category, with the validity period co-terminous with the first accredited category/ies.
The DAO no longer requires firms to apply for a separate accreditation for their branch offices so long as they provide DTI of the list of their branches.
The DAO requires proof of cargo insurance coverage, which must come in the form of insurance policy and official receipt showing payment of premium. IFFs and DFFs should submit Merchandise in Transit (Floater) Insurance while those applying for NVOCC category should submit valid Standard Global Comprehensive Transport Operators’ Liability Insurance.
The insurance should cover:
- Losses and damages due to loading and unloading
- Losses and damages while the vehicle is on stop overnight at an allowed territory
The minimum amount of insurance coverage remains the same as the previous rule:
- NVOCC – P1 million
- IFF – P600,000
- DFF – P300,000
For companies applying for more than one category, the category with the higher/highest minimum amount of insurance coverage will apply.
The order also requires key operating officers, who may be the owner, president, chief operating officer, general manager, or operations manager, to have relevant training of at least 60 hours for NVOCCs and IFFs and a minimum of 40 hours for DFF.
At least one of the key operating officers must have at least three years’ experience in shipping, freight forwarding and/or related activities.
For those applying as NVOCC, the three-year freight forwarding experience must include trainings on consolidation of export cargoes.
Filing and processing fees for application will be increased to P12,500 for NVOCC; P10,000 for IFF; and P7,500 for DFF.
An accredited firm applying for additional category will be charged a filing and processing fee of P3,500 for every additional category applied for. The validity period of the additional category will be co-terminus to the first accredited category/ies.
A documentary stamp tax of P30 will still be charged per application regardless of the mode of issuance of the certificate.
No fee will be collected from the applicant for the COA issued and generated via the online system, while P500 will be charged for a hard copy.
Certified copy of a lost or destroyed COA will be charged P500, while other relevant certifications, including system-generated copy of the certificate, will also be charged P500.
Applications for accreditation should be processed by DTI within three working days from receipt of complete requirements and payment of the filing fee.
The COA must be renewed within two months before expiration. An application for renewal of the COA filed after the expiry date will be subjected to a surcharge of 50% of filing and processing fee if filed within one month after expiration, and 100% of the fee if filed one month after expiration.
To ensure the DAO and other relevant issuances meet objectives, DTI will still exercise its visitorial power by entering, when necessary, any establishment, office, and premises of a firm reported to be engaging in transactions covered by the DAO.
The DAO lists acts that are grounds for suspension or revocation of the COA, including :
- engaging in the freight forwarding business without prior recognition
- misrepresentation by a firm that it has a subsisting recognition
- using of a subsisting recognition by another entity
- failure to deliver cargo as required in the transport document, including cases of missing items or damaged package or goods
- failure to submit required reports, documents, and/or papers
- breach of the existing Code of Conduct and Ethical Standards for Freight Forwarders
Complaints for violations of the DAO should be filed and processed in accordance with DTI’s existing uniform rules of procedure for handling or processing of administrative complaints under DTI Department Order No. 7 series of 2006 and its amendments.
Depending on the violation and the order of offense, penalties/sanctions range from stern warning, issuance of cease-and-desist order, and monetary fines.
To give sufficient time to comply with provisions of the DAO, all applications received before effectivity of the DAO will be processed based on the criteria/standards, documentary requirements, and fees provided under PSB AO 06-2005.
All COA issued before the effectivity of the DAO in accordance with PSB 06-2005 will be effective and valid until their respective expiry date, provided that, they shall comply with the training requirement on or before 90 days from the effectivity of the DAO, and with the capitalization requirement prescribed in it on or before January 1, 2025.
Applications for renewal received after the effectivity of the DAO but not later than December 31, 2024 should comply with the prescribed training and capitalization requirements on or before January 1, 2025.
Sea freight forwarders, unlike other transport services regulated by agencies under the Department of Transportation, are accredited by DTI, previously through PSB. When PSB was dissolved in 2014 under DTI’s rationalization plan, it was replaced by a new office, Supply Chain and Logistics Management Division (now called the Supply Chain and Logistics Division), while PSB’s regulatory powers and functions were transferred to the Fair Trade Enforcement Bureau.
The DAO comes after several consultations over the years were held for proposed new rules on sea freight forwarding, with the latest draft undergoing public consultation on December 6, 2023. Prior to this, a public consultation was also held in 2021 and a public hearing in November 2019. – Roumina Pablo
